USD Index returns to the positive territory near 101.70

• The index leaves behind the initial pessimism and moves to 101.70.
• Advanced US GDP surprised to the downside in Q1.
• Weekly Claims rose more than expected last week.

The greenback regained sudden upside traction and advanced to fresh daily highs near 101.80 when measured by the USD Index (DXY) on Thursday.

USD Index stronger on data, yields

The choppy trade around the index – and the rest of the global assets – remains well and sound on Thursday.

Indeed, the US Dollar manages to gather fresh steam after the US docket showed the flash GDP Growth Rate is expected to have expanded at an annualized 1.1% in Q1 vs. expectations for a 2.0% expansion.

However, the GDP Price Index came in hotter than estimated at 4.0% and the PCE Prices rose 4.2% QoQ and 4.9% when it comes to the Core PCE Prices, both prints also surpassing consensus.

In the meantime, the labour market continued to show signs of cooling after Initial Claims rose by 230K in the week to April 22.

Following the US data releases, US yields edge further up across the curve and underpin further the recovery in the Buck.

What to look for around USD

The dollar shrug off some of the initial selling pressure and now sets aside the strong pullback witnessed in the previous session.

Looking at the broader picture, the index continues to navigate in a consolidative phase against steady expectations of another rate increase in May by the Fed.

In favour of a pivot in the Fed’s hiking cycle following the May event appears the persevering disinflation and nascent weakness in some key fundamentals.

Key events in the US this week: Flash Q1 GDP Growth Rate, Initial Jobless Claims, Pending Home Sales (Thursday) – PCE/Core PCE, Employment Cost, Personal Income, Personal Spending, Final Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in 2024. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is up 0.19% at 101.63 and faces the next resistance level at 102.80 (weekly high April 10) followed by 103.05 (monthly high April 3) and then 103.17 (55-day SMA). On the flip side, the breach of 100.78 (2023 low April 14) would open the door to 100.00 (psychological level) and finally 99.81 (weekly low April 21 2022).